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Bear Camp Controls With Plethora of Factors


With a fresh contract high in the dollar index to start today, a 50-basis point rate hike from the Bank of Australia and a mixture of results from global PMI readings, the bear camp in gold starts the holiday shortened US trading week with an edge. However, gold prices are drafting support from surprise news of a significant jump in Indian gold imports last month. Apparently, Indian retail and dealers were enticed by the significant decline in gold prices as June imports reached 49 tons compared to only 17 tons on a year-over-year basis. Like gold, silver prices since the last positioning report into the low Friday have declined by $1.50 thereby putting the net spec and fund long positioning down to the lowest level since June 2019.


While the latest COT positioning report in palladium did not show a fresh “record short”, the positioning was within 70 contracts of a record. Even though the trade has not given the potential for supply losses from south Africa much credence and the trade has consistently discounted the potential reduction in supply flow from Russia, the combination of dual supply threats should concern traders especially with speculators and funds historically short. Obviously, the platinum market is fully discounting supply threats and in turn embracing the likelihood of demand destruction from a global slowdown. With the losses after the COT report was measured, we see the net spec and fund long at the most liquidated level since September 2018.


Clearly the Chinese stimulus package and increased chatter of a reduction in US tariffs on Chinese goods has failed to temper demand destruction selling in anticipation of global recession. At the present time ongoing declines in LME copper warehouse stocks are of little consideration as the trade sees demand falling faster than supply is falling. However, some will contend that supply is building, and a surplus will build in the upcoming quarters.

Futures and options trading involve significant risk of loss and may not be suitable for everyone.  Therefore, carefully consider whether such trading is suitable for you in light of your financial condition.  The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM.  The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared.  The information provided is designed to assist in your analysis and evaluation of the futures and options markets.  However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.

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